5 November 2020

Copenhagen Metro M1


  • In the 1990s, Copenhagen began to experience stagnant economic growth with a decreasing tax base
  • As no metro system existed in Denmark, the government sought to connect downtown Copenhagen with the Copenhagen airport through a conventional light-rail metro-line


  • The infrastructure project was costly, and the government could not increase local taxes due the city's declining tax base to finance its development of a new transit system
  • However, there were large pieces of vacant land between downtown Copenhagen and Ørestad South which were highly valuable


  • To finance the project, the Danish government launched an SPV, the Ørestad Development Corporation (ODC) to manage the sale and development of selected vacant land lots
  • Proceeds from the sales, and debt backed by the Danish government were used to finance the construction of the Metro M1 project
  • 55% of the land sold was provided by the City of Copenhagen and 45% by Denmark's government

Stakeholders Involved

  • Ørestad Development Corporation (ODC) – SPV that initially managing land sales and Copenhagen Metro M1 construction until 2007
  • Metroselskabet I/S – Management vehicle to whom the Metro M1project was transferred in 2007
  • Copenhagen Municipality – 50% share of Metroselskabet I/S • Danish Ministry of Finance – 41.7% share of Metroselskabet I/S
  • City of Frederiksberg – 8.3% share of Metroselskabet I/S


  • By 2013, the daily ridership on the Copenhagen metro amounted to 150k people, with an annual ridership of 55M passengers
  • The Metro M1 project supported the growth of Ørestad neighbourhood's residential population to over 10k, with a worker population of c. 17k. Going forward, the area's population is expected surpass 80k
  • As of 2016, no additional public funds were used to finance the transport project other than the government backed loans paid by the sale of land and development rights

Key lessons learnt

  • Governments can attain two levels of Value Capture, the proceeds from the sale of public land and their associated development rights and, taxes levied on new developments and business activities
  • Governments can enhance market interest in individual plots of land by enabling clustered developments through zoning policy e.g. land zoned for retail grows in value with the agglomeration of retail stores
  • While land sales can provide significant funding for projects, additional risk-mitigation strategies can help protect a project against exogenous shocks such as financial crises that reduce land value and market appetite for infrastructure investment